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Chapter 02 Developing Successful Marketing and Corporate Strategies
Multiple Choice
1. One of Sony’s new visions include __________.
a) global concern for environmental protection
b) profits above everything else
c) invent new and unusual products
d) return on investment by shareholders
e) amicable relations with the government
Ans: a
Feedback: Sony’s recent vision and missions have incorporated global concern for
environmental protection. Its vision in this area is stated as follows: Sony recognizes the
importance of preserving the environment for future generations and helps humanity to attain
the dream of a healthy and happy life.
Page: 32
Learning Objective: 3
2. Sony is primarily a marketer of __________.
a) electronics products
b) communication products
c) videos and video games
d) information technology products
e) all of the above
Ans: e
Feedback: Sony is one of the leading manufacturers for electronics, video, communications,
video games and information technology products for the consumer and professional market
Page: 31
Learning Objective: 1
3. In its business Sony aims to __________.
a) establish an ideal factory that stresses a spirit of freedom and open-mindedness
b) elevate Japan’s culture through dynamic technological and manufacturing activities
c) rapidly commercialise superior technology findings in universities and research institutions
that are worthy of application in common households
d) preserve the natural environment for future generations
e) do all of the above
Ans: e
Feedback: All of the options listed in the question are mentioned in the case of Sony on page
32 as part of Sony’s fundamental principles.
Page: 32
Learning Objective: 1
4. Sony’s vision declares its commitment to preserving the natural environment. An example
of action that reflects this commitment is __________.
a) allowing customers to trade in used products for new ones
b) contributing 7.5 percent of its pretax profits to environmental research
c) purchasing its supplies from environmentally responsible suppliers
d) its seeking to combine ongoing innovation in environmental technology with
environmentally sound business practices
e)all of the above
Ans: d
Feedback: On page 32 Sony declares that "[It] recognizes the importance of preserving the
natural environment for future generations and helps humanity to attain the dream of a
healthy and happy life … [It] is committed to achieving this goal by seeking to combine
ongoing innovation in environmental technology with environmentally sound business
practices."
Page: 32
Learning Objective: 1
5. Which of the following statements about Sony is most true?
a) It was initially called Tokyo Tsushin Kogyo K. K. but later adopted the corporate name
Sony in order to market itself worldwide
b) It is one of the world’s largest media conglomerates and made a profit of about US$66.4
billion in 2006
c) It is known for its creative marketing campaigns
d) It works with works with universities and research institutions to rapidly commercialise
superior technology that is suitable for household use
e) All of the above are true about Sony
Ans: e
Feedback: Ibuka, together with Akio Morito, 20 other employees, established the Tokyo
Tsushin Kogyo K. K., and later adopted the name “Sony” as its corporate name in order to
market itself worldwide. Today, the Sony Corporation is one of the world’s largest media
conglomerates with a turnover of about US$66.4 billion in 2006. Sony is also known for its
creative marketing campaigns, which have resulted in successful products such as the
Walkman, Trinitron, Handycam and Playstation.
Page: 31-32
Learning Objective: 1
6. In today's global competition, it is important to recognize __________.
a) the kinds of organizations that exist
b) what strategy is
c) how this strategy relates to the corporate level of organizations
d) how this strategy relates to the functional level of organizations
e) all of the above
Ans: e
Feedback: In today's global competition, it is important to recognize (1) the kinds of
organizations that exist, (2) what strategy is and, (3) how this strategy relates to the three
levels found in many large organizations.
Page: 33
Learning Objective: 1
7. A(n) __________ is a legal entity of people who share a common mission.
a) business firm
b) organization
c) religious group
d) industry
e) competitor cluster
Ans: b
Page: 33
Learning Objective: 1
8. A(n) __________ is a product, service or, idea that creates value for both the organization
and its customers by satisfying their needs and wants.
a) organization
b) business firm
c) firm
d) offering
e) industry
Ans: d
Page: 33
Learning Objective: 1
9. A __________ is a privately owned organization that serves its customers in order to earn
a profit.
a) business firm
b) nonprofit organization
c) government agency
d) public university
e) household
Ans: a
Page: 33
Learning Objective: 1
10. __________ is the reward to a business firm for the risk it undertakes in marketing its
offerings.
a) Shareholders' equity
b) Profit
c) Inventory turnover
d) Contribution margin
e) Asset leverage
Ans: b
Page: 33
Learning Objective: 1
11. Profit is __________.
a) the point at which company assets equal company liabilities
b) the money left over after a business firm's total expenses are subtracted from its total
revenues
c) the goodwill earned from implementing the societal marketing concept
d) the money earned when the economic order quantity is maintained
e) accurately described by all of the above
Ans: b
Page: 33
Learning Objective: 1
12. __________ is the money left over after a business firm's total expenses are subtracted
from its total revenues.
a) Shareholders' equity
b) Profit
c) Inventory turnover
d) Contribution margin
e) Asset leverage
Ans: b
Page: 33
Learning Objective: 1
13. Profit is __________.
a) the point at which company assets equal company liabilities
b) is the reward to a business firm for the risk it undertakes in marketing its offerings
c) the goodwill earned from implementing the societal marketing concept
d) the money earned when the economic order quantity is maintained
e) accurately described by all of the above
Ans: b
Page: 33
Learning Objective: 1
14. A __________ is a nongovernmental organization that serves its customers but does not
have profit as an organizational goal.
a) business firm
b) community action program
c) nonprofit state agency
d) nonprofit organization
e) cooperative
Ans: d
Page: 33
Learning Objective: 1
15. A nongovernmental organization that serves its customers but does not have profit as an
organizational goal is called a __________.
a) business firm
b) nonprofit organization
c) community action program
d) manufacturing agent
e) cooperative
Ans: b
Page: 33
Learning Objective: 1
16. The Red Cross, a service firm whose goal is that its revenues will equal its costs is a
__________.
a) business firm
b) nonprofit organization
c) community action program
d) manufacturing agent
e) cooperative
Ans: b
Feedback: The Red Cross is a nongovernmental organization that serves its customers but
does not have profit as an organizational goal.
Page: 35
Learning Objective: 1
17. Which statement best describes the most significant difference between a business firm
and a nonprofit organization?
a) Business firms operate with larger budgets than nonprofits
b) Nonprofit organizations do not carry on economic activities and, business firms do
c) Nonprofit organizations are concerned with social issues and, business firms are not
d) Both serve customers, but business firms seek a profit while nonprofit organizations do not
e) Nonprofit organizations are publicly owned and, business firms are not
Ans: d
Feedback: A business firm is a privately owned organization that serves its customers in
order to earn a profit so that it can survive. A nonprofit organization is a nongovernmental
organization that serves its customers but does not have profit as an organizational goal.
Page: 33
Learning Objective: 1
18. An example of a nonprofit organization is __________.
a) the Food and Drug Administration
b) FedEx
c) the Indonesian national football team
d) the Red Cross
e) all of the above
Ans: d
Feedback: Only the Red Cross is a nongovernmental organization that serves its customers
but does not have profit as an organizational goal.
Page: 33
Learning Objective: 1
19. Organizations that develop similar offerings, when grouped together, create a(n)
__________.
a) conglomerate
b) merger
c) industry
d) competitive landscape
e) acquisition
Ans: c
Page: 33
Learning Objective: 1
20. Which of the following statements about strategy is most true?
a) By following the best strategy an organization can be all things to all people
b) Once an organization is focused and has developed goals, it can then develop its strategies
c) Strategic direction must be explicit to be set by organizations
d) Strategy is an organization's long-term course of action designed to deliver a unique
customer experience while achieving its goals
e) All of the above are true of good strategy
Ans: d
Feedback: An organization has limited human, financial, technological and, other resources
available to produce and market its offerings—it can't be all things to all people! Every
organization must develop strategies to help focus and direct its efforts to accomplish its
goals. Strategy is an organization's long-term course of action designed to deliver a unique
customer experience while achieving its goals. Whether explicit or implicit, all organizations
set a strategic direction.
Page: 33-34
Learning Objective: 1
21. __________ is an organization's long-term course of action designed to deliver a unique
customer experience while achieving its goals.
a) Structure
b) A performance plan
c) Organizational conduct
d) Strategy
e) A long-term action plan
Ans: d
Page: 34
Learning Objective: 1
22. Large organizations are extremely complex. They usually consist of __________
organizational level(s) whose strategy is linked to marketing.
a) one
b) three
c) five
d) fifteen
e) fifty
Ans: b
Feedback: Large organizations are extremely complex. They usually consist of three
organizational levels whose strategy is linked to marketing. Figure 2-1 shows these levels as
corporate-level strategy, business unit-level strategy and, functional-level strategy.
Page: 33-34
Learning Objective: 1
23. Apex-Pal International Limited is a Singapore-based food and beverage company that has
developed a portfolio of 11 brands, including Sakae Sushi, focusing on offering healthy and
quality Japanese cuisine at affordable prices. Apex-Pal International Limited operates at the
__________ level of his organization.
a) business unit
b) functional
c) corporate
d) strategic
e) back office
Ans: c
Feedback: The corporate level is where top management directs overall strategy for the entire
organization.
Page: 33
Learning Objective: 1
24. The corporate level is where top management directs __________.
a) all employees' training and orientation
b) recruitment strategy and tactics
c) overall strategy for the entire organization
d) overall sales projections
e) all of the above
Ans: c
Page: 33
Learning Objective: 1
25. The corporate level is where the head of marketing __________.
a) directs all employees' training and orientation
b) decides recruitment strategy and tactics
c) sees that marketing strategy is implemented to achieve critical marketing goals
d) develops overall sales projections
e) does all of the above
Ans: c
Feedback: The head of marketing in today's organizations not only frames marketing strategy
but also sees that it is implemented to achieve critical marketing goals.
Page: 33
Learning Objective: 1
26. Which of the following statements about the chief executive officer (CEO) in an
organization is most true?
a) The CEO is the highest-ranking officer in the organization
b) The CEO is usually a member of the board of directors
c) The CEO oversees the organization's daily operations
d) The CEO spearheads strategy-planning efforts
e) The CEO does all of the above
Ans: e
Feedback: The chief executive officer (CEO) is the highest-ranking officer in the
organization and is usually a member of its board of directors. This person must possess
leadership skills and expertise ranging from overseeing the organization's daily operations to
spearheading strategy planning efforts that may determine its very survival.
Page: 33
Learning Objective: 1
27. A strategic business unit refers to a subsidiary, division or, unit of an organization that
__________.
a) directs overall strategy for the organization
b) markets a set of related products to a clearly defined group of customers
c) has marketing and other specialized activities
d) also has a comparable non-business unit
e) is usually non-profit
Ans: b
Page: 33-34
Learning Objective: 1
28. The acronym SBU stands for __________.
a) standard business unit
b) strategic business unit
c) strategic benefit of usage
d) service business unit
e) strategic business usage
Ans: b
Page: 33
Learning Objective: 1
29. The strategic business unit level __________.
a) works most directly with the targeted customers
b) directs the overall strategy for the organization
c) is most likely to change substantially over time
d) provides more end-user analysis
e) is the level at which managers set a more specific strategic direction for their businesses to
exploit value-creating opportunities
Ans: e
Page: 33-34
Learning Objective: 1
30. Which of the following statements about the strategic business unit level is most true?
a) It is the level that works most directly with the targeted customers
b) The overall strategy for the organization is directed at the strategic business unit level
c) In more complex organizations the corporate level and the strategic business unit level may
merge
d) More end-user analysis is provided at the strategic business unit level then at the functional
level
e) The strategic direction is more specific at the strategic business unit level than at the
corporate level
Ans: e
Feedback: At the strategic business unit level, managers set a more specific strategic direction
for their businesses to exploit value-creating opportunities than at the corporate level.
Page: 33-34
Learning Objective: 1
31. Each strategic business unit has marketing and other specialized activities (e.g., finance,
manufacturing or, research and development) at the __________ level, where groups of
specialists create value for the organization.
a) top management
b) business unit
c) functional
d) corporate
e) strategic
Ans: c
Page: 34
Learning Objective: 1
32. Specialized functions such as marketing and finance are generally referred to as _______.
a) functional areas
b) departments
c) groups
d) teams
e) partnerships
Ans: b
Page: 34
Learning Objective: 1
33. At what overall organizational level do people in the finance and the human resources
departments operate?
a) Top management level
b) Strategic business unit level
c) Functional level
d) Corporate level
e) Middle management level
Ans: c
Feedback: Specialized activities such as human resources, finance, research and development,
operate at the functional level of the overall organization.
Page: 34
Learning Objective: 1
34. At the strategic business unit level, the marketing department provides leadership
activities in __________.
a) talent management
b) fiscal restraint
c) look outward, keeping the organization focused on creating value both for it and for
customers
d) creating the corporate culture
e) sustaining the means-end chain
Ans: c
Feedback: A key role of the marketing department is to look outward, keeping the
organization focused on creating value both for it and for customers. This is accomplished by
listening to customers, developing and producing offerings and, implementing marketing
program activities.
Page: 34
Learning Objective: 1
35. A key role of the marketing department is to _________
a) allocate financial resources across business units
b) set the overall mission of the company
c) provide talent management services
d) look outward
e) assess global political situations
Ans: d
Feedback: A key role of the marketing department is to look outward, keeping the
organization focused on creating value both for it and for customers. This is accomplished by
listening to customers, developing and producing offerings and, implementing marketing
program activities.
Page: 34
Learning Objective: 1
36. The marketing department helps keep the organization focused on creating value both for
it and for customers. This is accomplished by __________.
a) listening to customers
b) developing offerings
c) producing offerings
d) implementing marketing program activities
e) doing all of the above
Ans: e
Feedback: A key role of the marketing department is to look outward, keeping the
organization focused on creating value both for it and for customers. This is accomplished by
listening to customers, developing and producing offerings and, implementing marketing
program activities.
Page: 34
Learning Objective: 1
37. When developing marketing programs for new offerings, marketing may provide staff to
serve as part of a(n) __________ of specialists from all the functional units who are mutually
accountable to a common set of performance goals.
a) department
b) system
c) organization
d) cross-functional team
e) company
Ans: d
Feedback: When developing marketing programs for new offerings or for improving existing
ones, an organization's senior management may form cross-functional teams. These consist of
a small number of people from different departments who are mutually accountable to
accomplish a task or a common set of performance goals.
Page: 34
Learning Objective: 1
38. Panasonic comprises 14 business domain companies, and each company has its own
separate R&D, productions and sales divisions that respond to its own business domain such
as AV, home appliances, industrial solutions and other electronics and consumer products.
The people who work in each business domain are most likely members of __________.
a) individualistic teams
b) siloed departments
c) multiple strategic directional teams
d) competitive teams
e) cross-functional teams
Ans: e
Feedback: Cross-functional teams are composed of a small number of people from different
departments in an organization who are mutually accountable to accomplish a task or a
common set of performance goals.
Page: 34
Learning Objective: 1
39. Today's organizations must be visionary—that is, they must __________.
a) forecast sales perfectly
b) examine the past carefully so as to learn from mistakes
c) anticipate future events and respond quickly and effectively
d) turn over the employee base frequently to get the best new ideas
e) do all of the above
Ans: c
Feedback: Management experts stress that to be successful, today's organizations must be
visionary—they must both anticipate future events and respond quickly and effectively.
Page: 35
Learning Objective: 2
40. To be successful a visionary organization must specify its __________.
a) core values
b) business
c) goals
d) strategies
e) all of the above
Ans: e
Feedback: Management experts stress that to be successful, today's organizations must be
visionary—they must both anticipate future events and respond quickly and effectively. This
requires a visionary organization to specify its foundation (why), set a direction (what) and,
formulate strategies (how) as shown in Figure 2-2.
Page: 35
Learning Objective: 2
41 Chief Marketing Officers (CMO) would most likely do which of the following?
a) Create and deliver value to the organization and to its customers
b) Oversee product planning
c) Oversee product positioning
d) Coordinate public relations initiatives
e) CMOs would likely do all of the above
Ans: e
Feedback: CMOs create and deliver value to the organization and its customers, including
overseeing product planning and positioning and, coordinating public relations initiatives.
Page: 35
Learning Objective: 2
42. An organization's __________ says, "This is what we are; this is what we stand for".
a) direction
b) strategy
c) goal
d) foundation
e) all of the above
Ans: d
Feedback: An organization's foundation or ideology says, "This is what we are; this is what
we stand for".
Page: 36
Learning Objective: 2
43. An organization's foundation is composed of which of the following elements?
a) Organizational culture
b) Business
c) Goals
d) Corporate strategies
e) All of the above
Ans: a
Feedback: An organizational foundation includes core values, mission and, organizational
culture according to Figure 2-2.
Page: 36
Learning Objective: 2
44. Which of the following statements about organizational foundation is most correct?
a) It rarely changes
b) It provides guidance and inspiration to its employees
c) It is composed of core values, mission and, organizational culture
d) It says what the organization is
e) All of the above are correct
Ans: e
Feedback: An organization's foundation or ideology says, "This is what we are; this is what
we stand for". It rarely changes, regardless of the environment or latest strategy-planning fad.
Successful visionary organizations use this foundation to provide guidance and inspiration to
its employees through three elements: core values, mission and, organizational culture.
Page: 36
Learning Objective: 2
45. An organization's __________ are the fundamental, passionate and, enduring principles
that guide its conduct over time.
a) core values
b) missions
c) culture
d) goals
e) strategies
Ans: a
Page: 36
Learning Objective: 2
46. The "Epson Way" is an example of Epson's __________.
a) vision and mission
b) core values
c) culture
d) goals
e) strategy
Ans: a
Feedback: The vision and mission of Epson is stated clearly in the Epson Way. It includes its
management and quality philosophy, commitment to innovation and principles of corporate
behaviour.
Page: 36
Learning Objective: 2
47. The Sony website states “… motivated individuals [are] to be united on a personal level,
to embrace a firm cooperative spirit and unleash their technological capacities without any
reserve”. This statement is MOST likely the foundation of Sony’s __________.
a) financial strategy
b) financial statements
c) core values
d) human resource strategy
e) global competitive strategy
Ans: c
Feedback: An organization's core values are the fundamental, passionate and, enduring
principles that guide its conduct over time. This statement is most likely a statement of
Sony’s core values.
Page: 36
Learning Objective: 2
48. Which of the following statements about core values are true?
a) Core values are developed by cross-functional teams
b) Core values motivate customers
c) Core values change depending on the financial condition of the firm
d) Core values establish the norms of the firm's organizational culture
e) Core values do all of the above
Ans: d
Feedback: Core values are developed by an organization's founders or senior management
and are consistent with their essential beliefs and character. Core values capture the collective
heart and soul of the organization. They should inspire and motivate employees to take
productive action. Core values are timeliness/ they should not change due to short-term
financial, operational or, strategic concerns. They establish the norms of its organizational
culture and, influence its strategy.
Page: 36
Learning Objective: 2
49. __________ are the people who are affected by what a company does and how well it
performs.
a) Every citizen
b) Only stakeholders
c) Only shareholders
d) Only customers
e) Only competitors
Ans: b
Page: 36
Learning Objective: 2
50. Stakeholders __________.
a) are only the people who own the company
b) are really unimportant to a company
c) are the people who are affected by what a company does and how well it performs
d) are only the customers of a company
e) never include the government
Ans: c
Feedback: Organizations must connect not only with their customers but also with all their
stakeholders, who are the people who are affected by what the company does and how well it
performs. This group includes employees, owners and, board members, as well as suppliers,
distributors, unions, local communities and,, of course, customers.
Page: 36
Learning Objective: 2
51. Which of the following statements about stakeholders is true?
a) Employees are an example of an internal stakeholder group
b) Stakeholders have a stake in how well a company performs
c) Regulatory agencies are a type of external stakeholder
d) The community in which an organization is located is a type of external stakeholder
e) All of the above statements about stakeholders are true
Ans: e
Feedback: Organizations must connect not just with their customers but with all their
stakeholders, who are the people who are affected by what the company does and how well it
performs. This group includes employees, owners and, board members, as well as suppliers,
distributors, unions, local communities and, of course, customers.
Page: 36
Learning Objective: 2
52. Which of the following statements about stakeholders is true?
a) Employees are typically not classified as a stakeholder group
b) There are only three types of external stakeholders—customers, suppliers and, distributors
c) All stakeholders are external to the organization
d) Stakeholders have a stake in how well a company performs
e) Stakeholders have no real impact on how well a company performs
Ans: d
Feedback: Organizations must connect not just with their customers but with all their
stakeholders, who are the people who are affected by what the company does and how well it
performs. This group includes employees, owners and, board members, as well as suppliers,
distributors, unions, local communities and,, of course, customers.
Page: 36
Learning Objective: 2
53. Which of the following is a stakeholder in the CBS, the station that airs the TV sitcom
Two and a Half Men?
a) The actors that star in Two and a Half Men
b) The people that provide the sets and the props used in Two and a Half Men
c) The television critics that review Two and a Half Men
d) Its television audiences
e) All of the above are stakeholders in Mediacorp Raintree Pictures
Ans: e
Feedback: Organizations must connect not just with their customers but with all their
stakeholders, who are the people who are affected by what the company does and how well it
performs. This group includes employees, owners and, board members, as well as suppliers,
distributors, unions, local communities and,, of course, customers.
Page: 36
Learning Objective: 2
54. Often used interchangeably with "vision" a(n) __________ statement frequently has an
inspirational theme.
a) point of difference
b) mission
c) business map
d) internal situation analysis
e) CEO's annual
Ans: b
Page: 36
Learning Objective: 2
55. By understanding its business, an organization can take steps to define its __________, a
statement of the organization's functions in society, often identifying its customers, markets,
products and, technologies.
a) benefit statement
b) business portfolio
c) functional philosophy
d) mission
e) corporate code
Ans: d
Page: 36
Learning Objective: 2
56. The __________ for Akira is "To continuously improve the quality of living with our
range of consumer electronics and home appliances through continuous innovation and
after-sales service".
a) benefit statement
b) business portfolio
c) functional philosophy
d) mission
e) corporate code
Ans: d
Feedback: A mission is a statement of the organization's functions in society, often
identifying its customers, markets, products and, technologies.
Page: 36
Learning Objective: 2
57. The ___________ for Singapore Red Cross Society is "The Singapore Red Cross Society
is dedicated to protecting human life and dignity, relieving human suffering and responding
to emergencies".
a) benefit statement
b) business portfolio
c) functional philosophy
d) mission
e) corporate code
Ans: d
Feedback: A mission is a statement of the organization's functions in society, often
identifying its customers, markets, products and, technologies.
Page: 36
Learning Objective: 2
58. ____________ refers to a set of values, ideas, attitudes and, norms of behavior that is
learned and shared among the members of an organization.
a) Corporate philosophy
b) Benefits statement
c) Organizational culture
d) Corporate profile
e) Business edge
Ans: d
Page: 36
Learning Objective: 2
59. Singtel’s core values include Teamwork – working as one team with shared goals. "We
value ideas and contributions from everyone. We recognize, respect and value diversity in the
team". Singtel’s core value sets the __________.
a) corporate confirmation
b) benefits statement
c) organizational culture
d) corporate profile
e) business edge
Ans: c
Feedback: An organization's culture refers to a set of values, ideas, attitudes and, norms of
behavior that is learned and shared among the members of an organization. Singtel’s
statement about teamwork is a set of values that the company is instilling in the organization
as part of its culture.
Page: 36
Learning Objective: 2
60. Which of the following statements about organizational culture is most correct?
a) Organizational culture exists only at the corporate level of an organization
b) When corporations merge organizational cultures can collide
c) Organizational culture is best used only at the functional level for the most effective results
d) Organizational culture is part of the organizational direction
e) Organizational culture is a statement of the organization's function in society
Ans: b
Feedback: An organizational culture exists which is a set of values, ideas, attitudes and,
norms of behavior that is learned and shared among the members of an organization. When
corporations merge or are acquired organizational cultures can collide, often resulting from
conflicts in missions and goals.
Page: 36
Learning Objective: 2
61. The organizational __________ includes the "business it is in" and its specific goals.
a) foundation
b) direction
c) culture
d) strategy
e) mission
Ans: b
Feedback: The organization's foundation enables it to set a direction, in terms of (1) the
"business it is in" and (2) its specific goals.
Page: 36
Learning Objective: 2
62. A(n) __________ describes the clear, broad, underlying industry category or market
sector of an organization's offering.
a) business
b) culture
c) mission
d) goal
e) strategy
Ans: a
Page: 35
Learning Objective: 2
63. In terms of an organization's business, railroads may have lost market share in the 20th
century because they __________.
a) were too slow and cumbersome
b) defined their business too narrowly
c) defined their business too broadly
d) priced their services too high
e) were simply an outmoded form of transportation
Ans: b
Feedback: In the first half of the 20th century the American railroads proclaimed, "We are in
the railroad business!" This narrow business definition lost sight of who their customers were
and what these needs were.
Page: 35
Learning Objective: 2
64. In the 19th century railroads may have let other forms of transportation take business
away from them because their definition included only the railroad business, rather than the
broader definition of __________.
a) transportation
b) mail delivery
c) entertainment
d) services
e) wholesaling
Ans: a
Feedback: The narrow business definition lost sight of who their customers were and what
these needs were. Railroads saw only other railroads as competitors and failed to develop
strategies to compete with airlines, barges, pipelines, trucks, bus lines and, cars—offerings
that carried both goods and people. Railroads would probably have fared better over the past
century by recognizing they were in "the transportation business".
Page: 35
Learning Objective: 2
65. Hitachi does business in various fields such as social infrastructure, home appliances,
materials, logistics and services. But they do not see themselves as a company doing many
businesses. Instead it sees itself as an innovative company that will “always breathe new life
into the next era under a corporate statement ‘Inspire the Next’ … to meet expectations of
society and customers in the new era”. Hitachi most likely was able to have a consolidated
revenue of over 11 000 000 million yen because __________.
a) it was lucky
b) it invented new products to meet customer expectations
c) it increased advertising for tried and true products
d) everyone likes Crest toothpaste
e) lots of people buy consumer products
Ans: b
Feedback: Hitachi declared “Inspire the Next” as a brand promise of the HITACHI brand in
order to meet the expectations of society and customers.
Page: 38
Learning Objective: 2
66. An accomplishment of a task to be achieved, often by a specific time is called a
__________.
a) plan
b) procedure
c) strategy
d) goal
e) vision
Ans: d
Page: 37
Learning Objective: 2
67. Which of the following statements about organizational goals is true?
a) The terms goal and objective can be used interchangeably
b) In an organization, goals exist at the corporate, business and, functional levels
c) All lower-level goals should contribute to the achievement of higher-level goals
d) Goals convert an organization's mission into performance targets to measure how well it is
doing
e) All of the above statements accurately describe organizational goals
Ans: e
Feedback: Goals or objectives (terms used interchangeably in the text) are statements of an
accomplishment of a task to be achieved, often by a specific time. Goals and objectives
convert the organization's mission and business into performance targets to measure how well
it is doing. Goals get converted into organizational strategies at the corporate, strategic
business unit and, functional levels. All lower-level goals must contribute to achieving goals
at the next, higher level.
Page: 37
Learning Objective: 2
68. Which of the following is a type of goal a business firm might pursue?
a) Profit
b) Sales revenue
c) Market share
d) Social responsibility
e) All of the above
Ans: e
Feedback: Business firms can pursue several different types of goals: profit, sales, market
share, quality, customer satisfaction, employee welfare and, social responsibility are
examples.
Page: 37
Learning Objective: 2
69. Classic economic theory assumes a firm seeks to maximize its long-run __________,
achieving as high a financial return on its investments as possible.
a) profit
b) sales revenue
c) market share
d) quality
e) employee welfare
ANs: A
Feedback: Business firms can pursue several different types of goals including profit goals to
get as high a financial return on its investments (ROI) as possible.
Page: 37
Learning Objective: 2
70. A new company projects that its sales will be greater than its expenses within the first
year of operation. This is an example of which type of goal?
a) Profit
b) Sales revenue
c) Market share
d) Unit sales
e) Quality
Ans: a
Feedback: Classic economic theory assumes a firm seeks to maximize long-run profit,
achieving as high a financial return on investment as possible. Profit is sales minus expenses.
Page: 37
Learning Objective: 2
71. If profits are acceptable, a firm may elect to __________ even though profitability may
not be maximized.
a) abandon green marketing
b) decrease employee loyalty
c) maintain or increase market share
d) decrease social responsibility
e) decrease customer satisfaction
Ans: c
Feedback: If profits are acceptable, a firm may elect to maintain or increase its sales level
even though profitability may not be maximized.
Page: 37
Learning Objective: 2
72. A small businesswoman was explaining how she was planning for the upcoming holiday
season. "We've got to maximize our sales by using increased advertising because profits are
adequate at the moment". From this statement, she is most concerned with __________ goals.
a) profit
b) sales revenue
c) market share
d) social responsibility
e) survival
Ans: b
Feedback: If profits are acceptable, a firm may elect to maintain or increase its sales level
even though profitability may not be maximized.
Page: 37
Learning Objective: 2
73. When sales revenue is chosen as an organizational goal, a firm __________.
a) increases sales levels and strives for a constant level of profits
b) maintains sales levels and strives for maximum profitability
c) maintains or increases sales levels even though profitability may not be maximized
d) decreases sales levels but increases profit margins
e) decreases sales levels and reduces the profit margin
Ans: c
Feedback: If profits are acceptable, a firm may elect to maintain or increase its sales level
even though profitability may not be maximized.
Page: 37
Learning Objective: 2
74. The ratio of sales revenue of the firm to the total sales revenue of all firms in the industry,
including the firm itself is, called __________.
a) sales quality
b) market share
c) industry potential
d) contribution margin
e) marginal revenue
Ans: b
Page: 37
Learning Objective: 2
75. Market share is __________.
a) the ratio of the profit of the firm to the total profits of all firms in the industry, not
including the firm itself
b) the ratio of the profit of the firm to the total profits of all firms in the industry, including
the firm itself
c) the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry,
not including the firm itself
d) the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry,
including the firm itself
e) the ratio of the profits of all firms in an industry to the profits of the firm
Ans: d
Page: 37
Learning Objective: 2
76. Market share is the ratio of sales revenue of the firm to the total sales revenue of all
__________, including the firm itself.
a) firms in the industry
b) firms in alternative industries
c) firms surveyed by the U.S. Government
d) firms sharing in marketing principles
e) domestic firms
Ans: a
Page: 37
Learning Objective: 2
77. A firm may choose to maintain or increase its market share, sometimes at the expense of
greater profits if __________.
a) there are poor sales databases
b) there are fluctuations in inventory
c) there are unpredictable sales expenses
d) industry status or prestige is at stake
e) inflation is present
Ans: d
Feedback: A firm may choose to maintain or increase its market share, sometimes at the
expense of greater profits if industry status or prestige is at stake.
Page: 37
Learning Objective: 2
78. FunBundle portable game consoles were developed through a joint venture between
Funzsoftware and the HitHard Technologies Limited. Complaints about the video game
began immediately after its introduction. These complaints ranged from missing parts to
incorrect programming. It would seem obvious that the manufacturer of FunBundle portable
game consoles should adopt __________ goals.
a) profit
b) sales revenue
c) market share
d) quality
e) employee welfare
Ans: d
Feedback: The manufacturer needs quality goals because it had missing parts and incorrect
programming. If quality was present, there would not be complaints like these.
Page: 37
Learning Objective: 2
79. Toyota invented the Just-In-Time (JIT) program that reduces in-process inventory and its
associated carrying costs. This is an example of a __________ goal.
a) quality
b) sales revenue
c) market share
d) profit
e) employee welfare
Ans: d
Feedback: Just-In-Time (JIT) is an inventory strategy implemented to improve the return on
investment of a business by reducing the in-process inventory and its associated carrying
costs. When implemented correctly, JIT can lead to dramatic improvements in a
manufacturing organisation’s return on investment, quality and efficiency.
Page: 37
Learning Objective: 2
80. FoneComm recently introduced the f-phone to great fanfare. Many corporate users have
found that it does not sync with their servers, thus not allowing users to download from his or
her company email account. When the phone was introduced, many users could not
immediately activate the phone. Based on these examples, it would seem that FoneComm
should have adopted more stringent __________ goals prior to releasing the f-phone.
a) technology
b) innovation
c) quality
d) service
e) satisfaction
Ans: c
Feedback: It seems that FoneComm did not have the highest quality goals prior to
introducing the f-phone. Otherwise the company would not likely have had activation
problems.
Page: 37
Learning Objective: 2
81. A catalog retailer who set as its qualitative goal to reduce merchandise returns by 20
percent would have set __________ goals.
a) customer satisfaction
b) employee welfare
c) market share
d) social responsibility
e) profit
Ans: a
Feedback: Customer satisfaction can be measured directly with surveys or tracked with proxy
measures like number of customer complaints or percent of orders shipped within 24 hours of
receipt.
Page: 37
Learning Objective: 2
82. Beng Soon Company ships each order within 48 hours and its guarantee is the best in the
world—"Guaranteed Period". These actions by Beng Soon Company are most likely
examples of __________ goals.
a) employee welfare
b) market share
c) social responsibility
d) customer satisfaction
e) Profit
Ans: d
Feedback: Customer satisfaction can be measured directly with surveys or tracked with proxy
measures like number of customer complaints or percent of orders shipped within 24 hours of
receipt.
Page: 37
Learning Objective: 2
83. LemonGrass provides healthcare for all employees who work over 20 hours per week.
The company believes that they are doing the right thing by covering their employees with
health care coverage. This is an example of __________ goals.
a) satisfaction
b) sales revenue
c) market share
d) quality
e) employee welfare
Ans: e
Feedback: A firm may recognize the critical importance of its employees by having an
explicit goal stating its commitment to good employment opportunities and working
conditions for them.
Page: 37
Learning Objective: 2
84. Many universities and other educational institutions provide retirement benefits by
doubling the percentage the employee pays into the account up to a certain percentage of his
or her pay. This provides a wonderful benefit to those who are full-time employees. This is an
example of a __________ goal.
a) satisfaction
b) sales revenue
c) market share
d) quality
e) employee welfare
Ans: e
Feedback: A firm may recognize the critical importance of its employees by having an
explicit goal stating its commitment to good employment opportunities and working
conditions for them.
Page: 37
Learning Objective: 2
85. Phill Pharmaceuticals is offering low-income senior citizens some of its most widely used
prescriptions for $15 each a month—much below the regular costs for these drugs. This
program, which serves senior citizens most likely grew out of a __________ goal.
a) profit
b) unit sales
c) sales revenue
d) market share
e) social responsibility
Ans: e
Feedback: A firm may seek to balance conflicting goals of consumers, employees and,
stockholders to promote overall welfare of all these groups, even at the expense of profits.
Page: 37
Learning Objective: 2
86. TOYZ is a $3 billion toy company that prides itself on donating to organizations that help
children, since children and their parents are the target market for the business. This is an
example of how TOYZ participates in corporate __________.
a) profitability
b) market share
c) sales revenue
d) unit sales
e) social responsibility
Ans: e
Feedback: A firm may seek to balance conflicting goals of consumers, employees and,
stockholders to promote overall welfare of all these groups, even at the expense of profits.
Page: 37
Learning Objective: 2
87. The concept of sustainable development asks a country to meet present needs without
__________.
a) minimizing return on investment
b) decreasing market share
c) decreasing unit sales
d) decreasing sales revenue
e) compromising the needs of future generations
Ans: e
Feedback: The United Nations report on sustainable development suggests that sustainable
development should meet present needs "without compromising the ability of future
generations to meet their own needs".
Page: 37
Learning Objective: 2
88. Corporate executives and world leaders are increasingly asked to address the issue of
__________, a term that refers to meeting present needs "without compromising the ability of
future generations to meet their own needs".
a) corporate culture
b) profit margins
c) strategic direction
d) acculturation
e) sustainable development
Ans: e
Feedback: Corporate executives and world leaders are increasingly asked to address the issue
of "sustainable development". This term was formally defined in a 1987 United Nations
report as meeting present needs "without compromising the ability of future generations to
meet their own needs".
Page: 37
Learning Objective: 2
89. __________ are an organization's special capabilities, including skills, technology and,
resources that distinguish it from other organizations and that provide value to its customers.
a) Accomplishments
b) Acquisitions
c) Capacities
d) Characteristics
e) Competencies
Ans: e
Page: 39
Learning Objective: 3
90. Defence Science and Technology Agency (DSTA) is a Singaporean company that
provides leading-edge technological solutions to the Singapore Army. Due to the resources it
makes available to its engineers and researchers, the company has some of the finest minds in
the country in its workforce. This ability to attract new talents to its workforce is an example
of a(n) __________.
a) synergistic capacity
b) competitive advantage
c) unsought benefit
d) product development strategy
e) competency
Ans: e
Feedback: Competencies are an organization's special capabilities, including skills,
technology and, resources that distinguish it from other organizations and that provide value
to its customers.
Page: 39
Learning Objective: 3
91. Designing a car is expensive and time-consuming even with the use of computers because
until recently there was no way for all the varied departments that are involved in new car
development to work together. Karz has created a unique central Web-based system that cuts
the design and production process by at least two years, thus providing value to the customer.
This is an example of a(n) __________.
a) benchmarking project
b) innovation-oriented mission
c) action program
d) operational goal implementation
e) competency
Ans: e
Feedback: Competencies are an organization's special capabilities, including skills,
technology and, resources that distinguish it from other organizations and that provide value
to its customers.
Page: 39
Learning Objective: 3
92. Evergreen Air Center is the world's biggest parking lot for unwanted aircraft. Airlines pay
a monthly fee from $750 to $5,000 to mothball airplanes at this site. Its location is on 1,600
acres of Arizona desert. The Southwest climate serves as a cheap and effective airplane
preservative. Evergreen's location is its __________.
a) operational goal
b) competency
c) tactical mission
d) benchmarked differentiator
e) innovative vision
Ans: b
Feedback: Competences are an organization's special capabilities (in this case, the climate
gives it the capabilities to preserve planes cheaply and efficiently) that distinguish it from
other organizations and provide value to its customers, the airlines.
Page: 39
Learning Objective: 3
93. Mobile phone companies broke the age-old business rule of staying within their
__________ by going beyond their expertise in running networks and billing subscribers to
designing handsets. Like Samsung, who puts a lot of emphasis on R&D so that it is able to
invent new products to meet customer expectations, making it a trendsetter in the mobile
phones industry.
a) goals
b) mission
c) innovative vision
d) competency
e) action program
Ans: d
Feedback: Competences are an organization's special capabilities (in this case, running
networks and, billing subscribers) that distinguish it from other organizations and provide
value to its customers, the mobile phone user.
Page: 39
Learning Objective: 3
94. __________ is a unique strength relative to competitors, often based on quality, time, cost
or, innovation.
a) Market penetration
b) Product differentiation
c) Competitive advantage
d) Business force
e) Business competency
Ans: c
Page: 39
Learning Objective: 3
95. Which of the following statements about quality as a competitive advantage is true?
a) The only way to create a competitive advantage is by improving quality
b) To be successful, a competitive advantage does not have to be unique
c) The ability to satisfy customer needs can be a source of a competitive advantage
d) A company must ignore costs when establishing a competitive advantage
e) All of the above statements about quality as a competitive advantage are true
Ans: c
Feedback: Competitive advantage is a unique strength relative to competitors, often based on
quality, time, cost or, innovation.
Page: 39
Learning Objective: 3
96. VideoAdvantage.net is a small company that rents DVD movies by mail using the Web.
It jumped into an industry where there were no firm leaders but lots of competitors and
established a loyal clientele by seizing the opportunity to provide a service that was not
available through other companies that rented movies over the Internet—reliable overnight
shipment. Its delivery system created its __________.
a) viable mission
b) competitive advantage
c) tactical innovation
d) benchmarking focus
e) sales orientation
Ans: b
Feedback: Competitive advantage is a unique strength relative to competitors, often based on
quality, time, cost or, innovation. In this case, it is the fast, reliable delivery.
Page: 39
Learning Objective: 3
97. Men'swear caters to the man who doesn't necessarily enjoy shopping. The stores are
located in outdoor shopping centers so that customers can get in and out quickly.
Additionally the Men’swear targets the budget-conscious consumer with suit prices ranging
from $250-300. Earnings rose 23% recently, indicating that the location of the stores and the
pricing strategy both are part of the Men’swear __________.
a) competitive advantage
b) benchmarking expertise
c) tactical innovation
d) leapfrogging capabilities
e) viable mission
Ans: a
Feedback: Competitive advantage is a unique strength relative to competitors, often based on
quality, time, cost or, innovation. In this case it is the store location and pricing strategy that
are the Men'swear competitive advantage.
Page: 39
Learning Objective: 3
98. A(n) __________ allows a firm to bring innovative products to markets rapidly in large
volumes.
a) fast cycle time
b) special delivery
c) asset of reliability
d) rapid volume cycle
e) innovation cycle
Ans: a
Page: 39
Learning Objective: 3
99. The acronym TQM stands for __________.
a) targeted quota management
b) tactical quota management
c) tangible and quantitative measurements
d) total quality management
e) tactical quantity marketing
Ans: d
Feedback: TQM stands for "total quality management".
Page: 39
Learning Objective: 3
100. __________ means those features and characteristics of an offering that influence its
ability to satisfy customer needs.
a) Product concept
b) Core benefit proposition
c) Strategic benefits
d) Quality
e) Core competency
Ans: d
Page: 39
Learning Objective: 3
101. When Sharp began manufacturing LCD flatscreen television, it studied small LCD
flatscreen televisions manufactured by competitor Casio to learn how its LCD televisions are
made and to use this information in its own design. It was engaging in __________.
a) benchmarking
b) competitive measuring
c) selective quality
d) resourcing
e) outsourcing
Ans: a
Feedback: Benchmarking is the process of discovering the best practices of organizations in
its own and other industries and then imitating them to leapfrog its competitors. In this case
Sharp studied small LCD flatscreen televisions by a competitor and pioneer Casio. The
information they got helped them to be the pioneer of big screen flatscreen LCD televisions.
Page: 39
Learning Objective: 3
102. __________ is the process of discovering the best practices of organizations in its own
and other industries and then imitating them to leapfrog its competitors.
a) Product emulation
b) Competitive measurement
c) Benchmarking
d) Reverse engineering
e) Resourcing
Ans: c
Page: 39
Learning Objective: 3
103. When GenMills sought ideas on how to reduce the time to convert its production lines
from one cereal to another, it sent a team to observe the pit crews at the Indianapolis 500 race.
To learn these lessons from a pit crew, GenMills used __________.
a) process emulation
b) research mimicry
c) benchmarking
d) reverse engineering
e) collaborative engineering
Ans: c
Feedback: Benchmarking is the process of discovering the best practices of organizations in
its own and other industries and then imitating them to leapfrog its competitors.
Benchmarking often involves studying operations of best-of-class organizations in
completely different businesses.
Page: 39
Learning Objective: 3
104. Which of the following are Giordano competitors?
a) Other catalog retailers
b) Traditional department stores
c) Mass merchandisers
d) Specialty shops
e) All of the above are Giordano competitors
Ans: e
Feedback: Giordano competes not only with other catalog retailers of clothing but with
traditional department stores, mass merchandisers, specialty shops and, well-known brands of
clothing sold in all these kinds of retailers.
Page: 39
Learning Objective: 3
105. The Boston Consulting Group (BCG) uses __________ to quantify performance
measures and growth targets to analyze its clients' SBUs as though they were a collection of
separate investments.
a) target marketing
b) business portfolio analysis
c) marketing strategic planning
d) market segmentation
e) stock segmentation
Ans: b
Page: 41
Learning Objective: 3
106. In the Boston Consulting Group (BCG) model to analyze a firm's strategic business units
or, SBUs, the vertical axis reflects the __________.
a) return on investment desired
b) market growth rate
c) market segment size
d) relative market share
e) number of employees
Ans: b
Feedback: The vertical axis is the market growth rate, which is the annual rate of growth of
the SBU's industry. The horizontal axis is the relative market share, defined as the sales of the
SBU divided by the sales of the largest firm in the industry.
Page: 41
Learning Objective: 3
107. In the Boston Consulting Group (BCG) model for analysis of a firm's strategic business
units or, SBUs, the horizontal axis reflects the __________.
a) national forecast
b) business portfolio in dollars
c) years of experience
d) market segment size
e) relative market share
Ans: e
Feedback: The vertical axis is the market growth rate, which is the annual rate of growth of
the SBU's industry. The horizontal axis is the relative market share, defined as the sales of the
SBU divided by the sales of the largest firm in the industry.
Page: 41
Learning Objective: 3
108. SBUs with a high share of high-growth markets that may not generate enough cash to
support their own demanding needs for future growth are known as __________.
a) dogs
b) cash cows
c) question marks
d) stars
e) bonanzas
Ans: d
Page: 42
Learning Objective: 3
109. __________ are SBUs with a low share of slow-growth markets—they may generate
enough cash to sustain themselves, but they do not hold the promise of ever becoming real
winners for the firm.
a) Cash cows
b) Stars
c) Question marks
d) Dogs
e) Problem children
Ans: d
Feedback: Dogs are SBUs with low shares of slow-growth markets. Dropping SBUs in the
dog quadrant from a business portfolio is generally advocated except when relationships with
other SBUs, competitive considerations or, potential strategic alliances exist. Also see Fig.
2-3.
Page: 42
Learning Objective: 3
110. __________ have dominant shares of slow-growth markets and provide cash to cover
the organization's overhead and to invest in other SBUs.
a) Cash cows
b) Stars
c) Question marks
d) Dogs
e) Problem children
Ans: a
Feedback: Cash cows are SBUs that generate large amounts of cash, far more than they can
invest profitably in themselves. They have dominant shares of slow-growth markets and
provide cash to cover the organization's overhead and to invest in other SBUs.
Page: 41
Learning Objective: 3
111. Using a BCG analysis, Kodak's ink-jet printers and cartridge business is, a(n)
__________.
a) star
b) cash cow
c) question mark
d) exclamation mark
e) shooting star
Ans: c
Feedback: In 2007 about 56 percent of digital camera owners printed their images at home. In
that year Kodak launched a line of multipurpose machines to print high-quality photos, make
copies and, send faxes. It's a "razor and blade" strategy again with high-quality ink cartridges
that will make photos at half the cost of Hewlett-Packard's (HP) printers. Perez counts on this
printer-and-cartridge combination becoming a star in the Kodak portfolio. But HP is the
entrenched 300-pound gorilla in this market. So the future of this question mark could range
from being a star to a dog.
Page: 42
Learning Objective: 3
112. Solarcom is a 30-year-old information technology company that owns several
subsidiaries. One of its subsidiaries is Atlantix Global Systems, which is one of the leading
wholesalers for refurbished computer equipment, an industry that is growing worldwide.
According to the BCG portfolio matrix, Atlantix Global would most likely be classified as a
__________.
a) dog
b) cash cow
c) question mark
d) star
e) problem child
Ans: d
Feedback: Atlantix Global Systems has a large share of a high-growth industry, the definition
of a star.
Page: 42
Learning Objective: 3
113. Several years ago, BlankDecker purchased GenE's small appliances product line.
BlankDecker purchased the line because it needed the cash infusion from a product line that
had a dominant market share. The small appliance industry is a slow-growth one. The small
appliances product line is most likely a __________ for BlankDecker.
a) dog
b) cash cow
c) question mark
d) star
e) problem child
Ans: b
Feedback: The small appliances product line holds a large share of a slow-growth industry,
the definition of a cash cow.
Page: 41
Learning Objective: 3
114. In its business portfolio analysis, an organization's SBUs often start as __________ and
then become __________.
a) dogs; question marks
b) question marks; stars
c) stars; question marks
d) stars; dogs
e) question marks; dogs
Ans: b
Feedback: In its business portfolio analysis, an organization's SBUs often start as question
marks and proceed counterclockwise to become stars, then cash cows and, finally dogs.
Page: 42
Learning Objective: 3
115. According to Figure 2-3, the circle labeled "2" has __________ market share than its
largest competitor.
a) slightly more
b) slightly less
c) significantly more
d) significantly less
e) about the same
Ans: b
Feedback: The horizontal axis shows that circle 2 has slightly less market share than its
largest competitor.
Page: 42
Learning Objective: 3
116. According to Figure 2-3, the most likely position for circle 1 in the future is as a
a) star
b) question mark
c) problem child
d) cash cow
e) dog
Ans: e
Feedback: The figure shows circle 1 as descending into a dog.
Page: 42
Learning Objective: 3
117. In Figure 2-3, the most likely reason given below that circle 4 would become a star is
__________.
a) the firm will remove cash from it
b) the firm will reduce advertising for it
c) the firm will inject cash into it
d) the firm will increase the market growth rate
e) the firm will decrease the market growth rate
Ans: c
Feedback: Because an organization has limited influence on market growth rate, its main
alternative is to try to change its relative market share. To accomplish this, management
decides what role each SBU should have in the future and either injects or removes cash from
it. To become a star the firm will have to inject cash into it.
Page; 42
Learning Objective: 3
118. The razor and blades strategy that Kodak followed refers to __________.
a) the similarity of Kodak's strategy with Canon's
b) making repeated sales of film to be used in a camera
c) moving the Kodak film from a cash cow to a dog in the BCG matrix
d) increasing the number of digital cameras that Kodak sells
e) Kodak did not follow a razor and blades strategy
Ans: b
Feedback: Called the "razor and blades" strategy, the company made money on the repeat
business from the lower-cost disposables (the "blades" or film), not on the product with
which they are used (the "razor" or camera).
Page: 42-43
Learning Objective: 3
119. One of the strengths inherent in the use of the BCG portfolio analysis is the fact that it
__________.
a) is remarkably easy to locate an SBU on the BCG matrix
b) considers all factors that might impact an SBU's value to an organization
c) acts as a strong motivational tool for employees in SBUs that have been labeled dogs or
problem children
d) forces firms to assess their SBUs in terms of relative market share and industry growth rate
e) shows competitors how to improve
Ans: d
Feedback: The primary strength of business portfolio analysis lies in forcing a firm to place
each of its SBUs in the growth-share matrix, which in turn suggests which SBUs will be cash
producers and cash users in the future.
Page: 43
Learning Objective: 3
120. One of the weaknesses inherent in the use of the BCG portfolio analysis is that it
__________.
a) acts as a strong motivational tool for employees in SBUs that have been labeled dogs or
problem children
b) is often difficult to get needed information
c) considers so many SBU factors beyond market growth rate and relative market share
d) does not require forecasts in order to be implemented
e) makes efficient use of all competitive information
Ans: b
Feedback: Weaknesses of this [BCG] analysis arise from the difficulty in (1) getting the
needed information and (2) incorporating competitive information into business portfolio
analysis.
Page: 43
Learning Objective: 3
121. An organization using the __________ develops a simple, excellent offering that
captures the imagination of its employees and its customers.
a) BCG matrix
b) Blue Ocean strategy
c) Green Forest analysis
d) Hedgehog Concept
e) Fox Analysis
Ans: d
Feedback: An organization using the Hedgehog Concept develops a simple, excellent
offering that captures the imagination of its employees and its customers.
Page: 43
Learning Objective: 3
122. When an organization goes outside of its industry and faces less competition it is
following a __________.
a) BCG strategy
b) Blue Ocean Strategy
c) Green Forest Analysis
d) Hedgehog strategy
e) Fox Analysis
Ans: b
Feedback: W. Chan Kim and Renée Maugorgne, co-authors of Blue Ocean Strategy, believe
that an organization must swim out of the "red ocean of bloody competition" and into a "blue
ocean having less competition".
Page: 43
Learning Objective: 3
123. __________ denote all industries (1) not yet in existence or (2) that are created by
expanding industry boundaries.
a) Green forests
b) Blue oceans
c) Red oceans
d) Purple skies
e) Orange skies
Ans: b
Feedback: Blue oceans denote all industries (1) not yet in existence or (2) that are created by
expanding industry boundaries.
Page: 43
Learning Objective: 3
124. A(n) __________ is the visual display on a single computer screen of the essential
information related to achieving a marketing objective.
a) marketing screen
b) objective dash
c) marketing dashboard
d) information screen
e) corporate dashboard
Ans: c
Page: 44
Learning Objective: 3
125. A measure of the quantitative value or trend of a marketing activity or result is called a
__________.
a) trend analysis
b) marketing measurement
c) marketing dashboard
d) marketing metric
e) value analysis
Ans: d
Page: 45
Learning Objective: 3
126. Which of the following statements about marketing metrics is most true?
a) A marketing metric is a qualitative trend
b) A marketing metric is a marketing activity
c) A marketing metric is used by accountants
d) The purpose of a marketing metric is to measure the quantitative value of a marketing
activity
e) All of the above are true
Ans: d
Feedback: A marketing metric is a measure of the quantitative value or trend of a marketing
activity or result.
Page: 45
Learning Objective: 3
127. To which product category does Figure 2-4 refer?
a) Electronics
b) Hardware
c) Software
d) Peripherals
e) Photo
Ans: e
Feedback: To the left of Figure 2-4 the product categories are listed and "electronics" has
been chosen; it is framed in orange rather than black.
Page: 45
Learning Objective: 3
128. According to Figure 2-4, during which year did cost of sales closely approach sales?
a) 1998
b) 1999
c) 2000
d) 2001
e) Each year shown
Ans: a
Feedback: In Figure 2-4, on the graph labeled "Sales vs. Cost of Sales" the yellow line (cost
of sales) comes the closest to the blue bar (sales) in 1998.
Page: 45
Learning Objective: 3
129. According to Figure 2-4, during which year was the margin the largest?
a) 1998
b) 1999
c) 2000
d) 2001
e) The margin was the same each year
Ans: d
Feedback: In Figure 2-4, on the graph labeled "Sales vs. Percent Margin" margin is highest in
2001 at approximately 18%.
Page: 45
Learning Objective: 3
130. According to Figure 2-4, during which year was sales revenue the largest?
a) 1998
b) 1999
c) 2000
d) 2001
e) The sales were flat
Ans: c
Feedback: In Figure 2-4, on the graphs labeled "Sales vs. Percent Margin" and "Sales vs. Cost
of Sales" sales are shown as highest in 2000.
Page: 45
Learning Objective: 3
131. Which of the following statements about a marketing dashboard is most true?
a) The more detail that is displayed the better it is for the manager
b) Up to 20 marketing metrics are shown on the marketing dashboard screen
c) The marketing dashboard is updated weekly
d) Marketing dashboards often show key measures such as HR turnover, strategy success and,
goals
e) Marketing dashboards provide graphic displays of a product category's performance, such
as sales, cost of sales and, percent margin
Ans: e
Feedback: Marketing dashboards show graphic displays of key measures of a product
category's performance, such as sales, cost of sales and, percent margin.
Page: 44
Learning Objective: 3
132. __________ is an approach whereby an organization allocates its marketing mix
resources to reach its target markets.
a) The calibrated marketing process
b) The strategic marketing process
c) The situational marketing process
d) The developmental market analysis
e) The market determinant method
Ans: b
Page: 46
Learning Objective: 4
133.The key steps of planning, implementation and, evaluation are part of what is called
__________.
a) Gap analysis
b) the strategic marketing process
c) the situational marketing process
d) the developmental market analysis
e) the market determinant method
Ans: b
Page: 46
Learning Objective: 4
134. In design, a marketing plan is most closely related to a __________.
a) novel
b) pyramid
c) road map
d) circle
e) cloverleaf
Ans: c
Feedback: Most organizations formalize the strategic marketing process as a marketing plan,
which is a road map for the marketing activities of an organization for a specified future time
period, such as one year or five years.
Page: 46
Learning Objective: 4
135. If sales are shown as decreasing on your marketing dashboard, what should you
investigate with market research?
a) The accounting records to be sure they are accurate
b) The financial statements
c) Whether consumer tastes have changed
d) The number of support personnel you have at the plant
e) How long the production line is running
Ans: c
Feedback: Marketing is often about grappling with sales shortfalls. You'll want to do the
marketing research to see if the problem starts with (1) an external factor like changing
consumer tastes or (2) an internal factor like a breakdown in your distribution.
Page: 46
Learning Objective: 4
136. What are the three steps involved in the PLANNING phase of the strategic marketing
process?
a) Situation (SWOT) analysis; market-product focus and goal setting; and marketing program
development
b) Planning; implementation; and control
c) Set market and product goals; select target markets; find points of difference; and position
the product
d) Identify industry trends; analyze competitors; assess own company; and research customer
e) Identify where we have been; where we are headed; and where we are now
Ans: a
Feedback: The three steps involved in the planning phase of the strategic marketing process
are listed in Figure 2-5 as Situation (SWOT) analysis, market-product focus and goal setting
and, marketing program.
Page: 47
Learning Objective: 4
137. Step two in the planning phase of the strategic marketing process is __________.
a) the situation analysis
b) the market-product focus and goal setting
c) the marketing program
d) implementation
e) obtaining resources
Ans: b
Feedback: The planning phase of the strategic marketing process has 3 steps. Step 1 is the
situation analysis. Step 2 is market-product focus and goal setting. Step 3 is the marketing
program. The Implementation phase is when resources are obtained.
Page: 49
Learning Objective: 4
138. Step three in the planning phase of the strategic marketing process is __________.
a) the situation analysis
b) the market-product focus and goal setting
c) the marketing program
d) implementation
e) obtaining resources
Ans: c
Feedback: The planning phase of the strategic marketing process has 3 steps. Step 1 is the
situation analysis. Step 2 is market-product focus and goal setting. Step 3 is the marketing
program. The Implementation phase is when resources are obtained.
Page: 50
Learning Objective: 4
139. The market-product focus and goal setting part of the planning process includes
__________.
a) set market and product goals
b) select target markets
c) find points of difference
d) position the product
e) all of the above
Ans: e
Feedback: The planning phase of the strategic marketing process has 3 steps. Step 1 is the
situation analysis. Step 2 is market-product focus and goal setting. This step includes set
market and product goals, select target markets, find points of difference, position the product.
Step 3 is the marketing program.
Page: 49
Learning Objective: 4
140. The first step in the strategic marketing process is __________.
a) establishing the budget
b) developing advertising appeals
c) goal setting
d) marketing programming
e) situation analysis
Ans: e
Feedback: As shown in Figure 2-5, the planning phase of the strategic marketing process
consists of the three steps shown at the top of the figure: (1) situation analysis, (2)
market-product focus and goal setting and, (3) the marketing program.
Page: 46
Learning Objective: 4
141. Taking stock of where the firm or product has been recently, where it is now and, where
it is headed in terms of the organization's plans and the external factors and trends affecting it
is called the __________.
a) systems analysis
b) strategic market plan
c) goal setting step
d) planning gaps
e) situation analysis
Ans: e
Page: 46
Learning Objective: 4
142. An effective technique a firm can use to appraise in detail its internal strengths and
weaknesses and external opportunities and threats is called __________.
a) SWOT analysis
b) strategic management
c) market segmentation
d) market programming
e) marginal analysis
Ans: a
Page: 47
Learning Objective: 4
143. In the 1990s, insurgence of cheaper flights by budget airlines drove the many national
airlines to the brink of bankruptcy. Garuda Indonesia’s market share in the industry for
example, collapsed from more than 40 percent to 23 percent. However, within a few years,
Garuda Indonesia managed to regain some control of the market, both locally and overseas.
From a marketing perspective, what was the most likely first step in Garuda Indonesia’s
resurgence?
a) Development of a new mission statement and subsequent marketing strategy
b) Repositioning their product in the minds of motorcycle buyers
c) Performing a SWOT analysis
d) Seeking new markets for the motorcycles both in the U.S. and in foreign markets
e) Improving the quality of their product and communicating this to motorcycle buyers
Ans: c
Feedback: Prior to making changes in either product or marketing strategy, the firm would
have needed to ascertain its internal strengths and weaknesses and its external threats and
opportunities.
Page: 47
Learning Objective: 4
144. The consumer products industry is one with several large competitors, soaring raw
materials prices and, strong demands from powerful retailers for lower prices. As a result
Ginvera and Follow Me Holdings, the makers of products such as Ginvera lipsticks and
Follow Me Shampoos both reduced their earnings forecasts. Yet Lion Corp, another
consumer products company did not. At Lion Corp, innovation is a key attribute, allowing the
company to update all of their brands and to invent products such as Shokubutsu Shower
Foam that consumers crave. Lion Corp has also used its marketing know-how to develop
unique product placements on television shows that highlight its brands. A SWOT analysis
for Lion Corp of this information would indicate that the overall industry situation is a
__________ while the invention taking place at Lion Corp is a __________.
a) strength; weakness
b) weakness; threat
c) threat; strength
d) opportunity; threat
e) opportunity; strength
Ans: c
Feedback: A threat is an external factor such as soaring raw materials prices and strong
demands from powerful retailers for lower prices; a strength is an internal attribute such as
innovation and marketing know how that can be used to improve the company.
Page: 47
Learning Objective: 4
145. The consumer products industry is one with several large competitors, soaring raw
materials prices and, strong demands from powerful retailers for lower prices. As a result
Ginvera and Follow Me Holdings, the makers of products such as Ginvera lipstick and
Follow Me Shampoo both reduced their earnings forecasts. Yet Lion Corp, another consumer
products company did not. At Lion Corp innovation is a key attribute, allowing the company
to update all of their brands and to invent products such as Shokubutsu Shower Foam that
consumers crave. Lion Corp has also used their marketing know-how to develop unique
product placements on television shows that highlight its brands. A SWOT analysis for Lion
Corp of this information would indicate that the powerful retailers who demand lower pricing
is a __________ while the innovation taking place at Lion Corp is a __________.
a) strength; weakness
b) weakness; threat
c) threat; strength
d) opportunity; threat
e) opportunity; strength
Ans: c
Feedback: A threat is an external factor such as soaring raw materials prices and strong
demands from powerful retailers for lower prices; a strength is an internal attribute such as
innovation and marketing know how that can be used to improve the company.
Page: 47
Learning Objective: 4
146. The consumer products industry is one with several large competitors, soaring raw
materials prices and, strong demands from powerful retailers for lower prices. As a result
Ginvera and Follow Me Holdings, the makers of products such as Ginvera lipsticks and
Follow Me Shampoo both reduced their earnings forecasts. Yet Lion Corp, another consumer
products company did not. At Lion Corp innovation is a key attribute, allowing the company
to update all of their brands and to invent products such as Shokubutsu Shower Foam that
consumers crave. Lion Corp has also used their marketing know-how to develop unique
product placements on television shows that highlight its brands. A SWOT analysis for Lion
Corp of this information would indicate that the soaring raw materials prices are a
__________ while the product placement highlighting its brands is a __________.
a) strength; weakness
b) weakness; threat
c) threat; strength
d) opportunity; threat
e) opportunity; strength
Ans: c
Feedback: A threat is an external factor such as soaring raw materials prices and strong
demands from powerful retailers for lower prices; a strength is an internal attribute such as
innovation and marketing know how that can be used to improve the company.
Page: 47
Learning Objective: 4
147. Situation analysis requires a firm to consider both internal and external factors. Which of
the following is NOT an example of an external factor?
a) Competitive
b) Technological
c) Consumer demand
d) Political and legal factors
e) Departmental objectives
Ans: e
Feedback: Alternatives a, b, c and, d are all external factors. Departmental objectives as well
as departmental resources and organizational strengths are examples of internal factors.
Page: 46
Learning Objective: 4
148. A recent initiative mandated that the Malaysian Road Transport Department (RTD)
establish a national traffic information collection system. The marketing manager of a
company that provided traffic reports for local radio stations would most likely incorporate
this knowledge into its SWOT analysis as __________.
a) a strength if the company has an existing working relationship with the RTD
b) a threat if the RTD will give this information directly to the radio stations
c) a weakness if the company that provides local traffic information has no employees
technologically capable of using the RTD system
d) an opportunity if the RTD is creating a network of local traffic-information providers to
address the mandate
e) all of the above
Ans: e
Feedback: A working relationship with the RTD would be an internal force that would
positively impact the company. If the information were provided directly to the radio stations
so that the stations will no longer need to pay for the information, it would be a threat since
RTD is external to the organization. It would be a weakness if there were no employees
capable of using the equipment that could be overcome fairly easily. The creation of a
network of companies like the local one would be an external positive influence and would
therefore be an opportunity.
Page: 47
Learning Objective: 4
149. What is the marketing term for aggregating prospective buyers into groups that have
common needs and will respond similarly to a marketing action?
a) Aggregation marketing
b) Market segmentation
c) Market clustering
d) Profiling
e) Mass marketing
Ans: b
Page: 49
Learning Objective: 4
150. To develop a successful marketing plan for soda __________ would most likely be used
to group consumers on the basis of whether they wanted sugar-free and caffeine-free soda,
caffeine-free sugared soda or, regular soda with sugar and caffeine.
a) aggregation marketing
b) market segmentation
c) market clustering
d) profiling
e) mass marketing
Ans: b
Feedback: Market segmentation is the term for aggregating prospective buyers into groups
that have common needs and will respond similarly to a marketing action.
Page: 49
Learning Objective: 4
151. A toothbrush manufacturer sells several lines of toothbrushes. One line is for small
children, one line is for people with gum problems and, one is for people who wear dentures.
These different products are targeted toward different groups based on __________.
a) organizational strengths
b) market programming
c) market segmentation
d) distinctive competencies
e) organizational opportunities
Ans: c
Feedback: Market segmentation involves aggregating prospective buyers into groups that
have common needs and will respond similarly to a marketing action.
Page: 49
Learning Objective: 4
152. Marketing goal setting involves setting measurable __________ to be achieved.
a) financial limits
b) marketing objectives
c) quality standards
d) production quotas
e) research and development aspirations
Ans: b
Feedback: Goal setting here involves setting measurable marketing objectives to be achieved
possibly for a specific market, a specific product or brand or, an entire marketing program.
Page: 49
Learning Objective: 4
153. Those characteristics of a product that make it superior to competitive substitutes are
called __________.
a) consumer standards
b) perceptual segments
c) marketing selectives
d) points of difference
e) product stereotypes
Ans: d
Page: 49
Learning Objective: 4
154. At which step of the planning stage of the strategic marketing process does a firm
develop its marketing mix?
a) Situation analysis
b) Goal setting
c) Marketing program
d) Sales forecasting
e) Market segmentation
Ans: c
Feedback: The marketing program represents the "how" part of the strategic marketing
process. At this point, an organization develops both its marketing mix and budget.
Page: 50
Learning Objective: 5
155. A cohesive marketing program concentrates on __________.
a) product
b) price
c) promotion
d) place
e) all of the above
Ans: e
Feedback: A cohesive marketing program is composed of all of the 4 Ps, also known as "the
marketing mix".
Page: 50
Learning Objective: 5
156. The consumer products industry is one with several large competitors, soaring raw
materials prices and, strong demands from powerful retailers for lower prices. As a result
Ginvera and Follow Me Holdings, the makers of products such as Ginvera lipstick and
Follow me Shampoo both reduced their earnings forecasts. Yet Lion Corp, another consumer
products company did not. At Lion Corp, innovation is a key attribute, allowing the company
to update all of their brands and to invent products such as Shokubutsu Shower Foam that
consumers crave. Lion Corp has also used their marketing know-how to develop unique
product placements on television shows that highlight its brands. Shokubutsu Shower Foam
is an example of Lion Corp's __________.
a) products
b) prices
c) promotions
d) places
e) all of the above
Ans: a
Feedback: Shokubutsu Shower Foam is a Lion Corp product.
Page: 50
Learning Objective: 5
157. The consumer products industry is one with several large competitors, soaring raw
materials prices and, strong demands from powerful retailers for lower prices. As a result
Ginvera and Follow Me Holdings, the makers of products such as Ginvera lipstick and
Follow Me Shampoo both reduced their earnings forecasts. Yet Lion Corp, another consumer
products company did not. At Lion Corp innovation is a key attribute, allowing the company
to update all of their brands and to invent products such as Shokubutsu Shower Foam that
consumers crave. Lion Corp has also used their marketing know-how to develop unique
product placements on television shows that highlight its brands. Product placement on
television shows is an example of Lion Corp's __________.
a) products
b) prices
c) promotions
d) places
e) all of the above
Ans: c
Feedback: Product placement on television shows is an example of Lion Corp's promotion.
Page: 50
Learning Objective: 5
158. The __________ element of the marketing mix includes features, packaging, brand
name and, warranty.
a) product
b) pricing
c) promotion
d) place
e) services
Ans: a
Feedback: The product element of the marketing mix includes features, packaging, brand
name and, warranty.
Page: 50
Learning Objective: 5
159. The __________ element of the marketing mix includes outlets, channels, coverage,
transportation and, stock level.
a) product
b) pricing
c) promotion
d) place
e) budgeting
Ans: d
Feedback: The place element of the marketing mix includes outlets, channels, coverage,
transportation and, stock level.
Page: 50
Learning Objective: 5
160. The second phase of the strategic marketing process is the __________.
a) motivational phase
b) strategic phase
c) planning phase
d) implementation phase
e) evaluation phase
Ans: d
Feedback: Implementation, the second phase of the strategic marketing process, involves
carrying out the marketing plan that emerges from the planning phase.
Page: 51
Learning Objective: 5
161. Two major elements of the implementation phase of the strategic marketing process are
__________.
a) segmenting the market and selecting target markets
b) establishing a business mission and designing measurable goals and objectives
c) designing the marketing mix and setting the budget
d) identifying deviations in the marketing plan and acting on them
e) executing the marketing program and designing the marketing organization
Ans: e
Feedback: The four components of the implementation phase include (1) obtaining resources,
(2) designing the marketing organization, (3) developing schedules and, (4) actually
executing the marketing program designed in the planning phase.
Page: 51
Learning Objective: 5
162. Two major elements of the implementation phase of the strategic marketing process are
__________.
a) segmenting the market and selecting target markets
b) establishing a business mission and designing measurable goals and objectives
c) designing the marketing mix and setting the budget
d) identifying deviations in the marketing plan and acting on them
e) obtaining resources and developing schedules
Ans: e
Feedback: The four components of the implementation phase include (1) obtaining resources,
(2) designing the marketing organization, (3) developing schedules and, (4) actually
executing the marketing program designed in the planning phase.
Page: 51
Learning Objective: 5
163. Two major elements of the implementation phase of the strategic marketing process are
__________.
a) segmenting the market and selecting target markets
b) establishing a business mission and designing measurable goals and objectives
c) designing the marketing mix and setting the budget
d) identifying deviations in the marketing plan and acting on them
e) obtaining resources and designing the marketing organization
Ans: e
Feedback: The four components of the implementation phase include (1) obtaining resources,
(2) designing the marketing organization, (3) developing schedules and, (4) actually
executing the marketing program designed in the planning phase.
Page: 51
Learning Objective: 5
164. Two major elements of the implementation phase of the strategic marketing process are
__________.
a) segmenting the market and selecting target markets
b) establishing a business mission and designing measurable goals and objectives
c) developing schedules and executing the marketing program
d) identifying deviations in the marketing plan and acting on them
e) designing the marketing mix and setting the budget
Ans: c
Feedback: The four components of the implementation phase include (1) obtaining resources,
(2) designing the marketing organization, (3) developing schedules and, (4) actually
executing the marketing program designed in the planning phase.
Page: 51
Learning Objective: 5
165. The FunBundle video game console was developed through a joint venture between
Funsoftware and the HitHard Technologies Limited. Plans were made to rush the product to
market to counter new Playstation and WinWin consoles that were also being released about
the same time. Complaints about the video game began immediately after its introduction.
These complaints ranged from missing parts to incorrect programming. In which phase of the
strategic marketing process did the FunBundle strategy fail?
a) The goal-setting phase
b) The implementation phase
c) The control phase
d) The strategic development phase
e) The resource administration phase
Ans: b
Feedback: The best-planned marketing strategy is virtually worthless if the plan cannot be
successfully implemented and executed. Successful implementation includes careful planning
and attention to specific tactics such as being sure all parts are present and that the
programming is correct.
Page: 51
Learning Objective: 5
166. A marketing strategy is the means by which a marketing goal is to be achieved. Two
factors that usually characterize a marketing strategy are __________.
a) specific goals and organizational objectives
b) a detailed marketing plan and marketing budget
c) marketing strategies and marketing tactics
d) a specified target market and a marketing program to reach it
e) marketing programs and deviation control
Ans: d
Feedback: A marketing strategy is the means by which a marketing goal is to be achieved,
usually characterized by a specified target market and a marketing program to reach it. The
term implies both the end sought (target market) and the means to achieve it (marketing
program).
Page: 52
Learning Objective: 5
167. Which of the following statements reflects both of the key elements in developing a
marketing strategy for Con-Krete Ltd., a company that produces specialized concrete surfaces
for heavily trafficked areas such as retail outlets and amusement parks?
a) Buy ads in all the major trade journals aimed at businesses in the entertainment and/or
sports industry
b) Communicate using direct mail about the various walking surfaces Schofield can create for
contractors who are building riding and walking paths
c) Design a sample ad and test it using visitors to a trade show
d) Hire six new sales representatives for the Midwest regional office and train them on all
aspects of strategy
e) Create a focus group to decide on what surface to use for a religious-theme park in Brazil
Ans: b
Feedback: Alternative b is the only answer, which both identifies a target market (contractors
building riding and walking paths) and describes the program to reach it (direct mail to
communicate the variety of surfaces). All the other answers are examples of marketing tactics
only.
Page: 51
Learning Objective: 5
168. Marketing tactics are __________.
a) the long-term decisions made to implement the marketing program and the monitoring of
those decisions
b) the detailed day-to-day operational decisions essential to the overall success of marketing
strategies
c) the steps taken to develop an effective marketing plan
d) the development of marketing strategies to achieve the organization's marketing objectives
e) the refinement of the organization's mission based on the results obtained from a marketing
audit
Ans: b
Page: 52
Learning Objective: 5
169. Crescendo, whose specialty is in vinegars and fine oils, decided to offer the product in
30 millilitre and 60 millilitre sizes as well as in a 120 millilitre Asian glass bottle. They
decided to sell the vinegar only through the mail and to price the smaller bottles at $24.45 and
the largest bottles at $83.25. They were determining Prairie Herb's marketing __________.
a) tactics
b) missions
c) visions
d) strategies
e) operational procedures
Ans: b
Feedback: Marketing tactics are detailed day-to-day operational decisions essential to the
overall success of marketing strategies.
Page: 36
Learning Objective: 5
170. Compared to marketing strategies, marketing tactics generally involve actions that
__________.
a) must be taken sooner rather than later
b) are long term and need to be carefully developed rather than short term
c) involve upper levels of management rather than front-line managers
d) are general rather than specific in nature
e) have been successfully implemented in the past
Ans: a
Feedback: Marketing tactics are detailed day-to-day operational decisions essential to the
overall success of marketing strategies. Actions must be taken as conditions change and
special situations occur. They may or may not have been previously implemented.
Page: 52
Learning Objective: 5
171. The two major aspects of the evaluation phase of the strategic marketing process are
__________.
a) segmenting the market and selecting target markets
b) establishing a business mission and designing measurable goals and objectives
c) designing the marketing mix and setting the budget
d) identify deviations from goals and act on the deviations
e) executing the marketing plan and designing the marketing organization
Ans: d
Feedback: The evaluation phase of the strategic marketing process seeks to keep the
marketing program moving in the direction set for it. Accomplishing this requires the
marketing manger to (1) compare the results of the marketing program with the goals in the
written plans to identify deviations and (2) act on these deviations correcting negative
deviations and exploiting positive ones.
Page: 53
Learning Objective: 5
172. The third phase of the strategic marketing process is the __________.
a) implementation phase
b) planning phase
c) tactical phase
d) evaluation phase
e) goal-setting phase
Ans: d
Feedback: Figure 2-5 shows the three phases of the strategic marketing process. The
evaluation phase is the third phase. The evaluation phase of the strategic marketing process
seeks to keep the marketing program moving in the direction set for it.
Page: 53
Learning Objective: 5
173. The difference between the projection of the path to reach a new goal and the projection
of the path of the results of a plan already in place is called __________.
a) the contribution margin
b) the marginal space
c) the breakeven point
d) the planning gap
e) differential location
Ans: d
Page: 53
Learning Objective: 5
174. Recently Kodak had a very flat level of sales revenue. The CEO did not like the
no-growth results and instead forecasted an increase in sales revenue based on new plans and
actions. The difference between the existing flat level of sales revenue and the increased level
is known as __________.
a) the contribution margin
b) the marginal space
c) the breakeven point
d) the planning gap
e) differential location
Ans: d
Feedback: A planning gap is the difference between the projection of the path to reach a new
goal and the projection of the path of the results of a plan already in place.
Page: 53
Learning Objective: 5
175. Evergreen Air Center is the world's largest parking lot for unwanted commercial aircraft.
Airlines pay from $750 to $5,000 monthly for the storage services provided by Evergreen.
Prior to September 2001, the company had 140 discarded airplanes at its Arizona facilities
and was growing at a rate of about six planes monthly with about two a month sold for parts
and/or scrap metal. After calamity struck the airline industry in September 2001, the airlines
have retired over a thousand planes—many of which found their way to Evergreen. Now the
actual number of planes stored at Evergreen differs significantly from the prediction based on
previous behavior. This difference is referred to as __________.
a) the contribution margin
b) the marginal space
c) the breakeven point
d) the planning gap
e) differential location
Ans: d
Feedback: A planning gap is the difference between the projection of the path to reach a new
goal and the projection of the path of the results of a plan already in place.
Page: 53
Learning Objective: 5
176. After examining a planning gap, firms typically attempt to __________.
a) decide if the time horizon should be increased or decreased
b) perform a SWOT analysis with their major competitor as the focus
c) use statistical trend analysis to interpret the results
d) exploit a positive deviation and correct a negative deviation
e) adopt a product-market focus
Ans: d
Feedback: A planning gap is the difference between the projection of the path to reach a new
goal and the projection of the path of the results of a plan already in place. The ultimate
purpose of the firm's marketing program is to "fill in" this planning gap—to move its future
sales revenue line from the plan to the more challenging target.
Page: 53
Learning Objective: 5
177. As the CEO of the company the sales revenues of which are shown in Figure 2-9 are you
__________
a) proud of your accomplishments between 2002 and 2006?
b) feeling good because the results are precisely on track with plan?
c) going to reward your subordinates for outstanding performance?
d) worried that the board might fire you?
e) devising a new plan since the prior plan is clearly not working?
Ans: e
Feedback: When evaluation shows that actual performance fails to meet expectations,
managers need to take corrective actions such as devising a new plan.
Page: 53
Learning Objective: 5
178. Based on the information in Figure 2-9 between 1998 and 2010 the planning gap
__________.
a) is widening
b) is becoming narrower
c) is staying the same
d) size cannot be determined
e) occurred in 1998
Ans: d
Feedback: A planning gap is the difference between the projection of the path to reach a new
goal (line BD) and the projection of the path of the results of a plan already in place (line BC).
This difference is widening.
Page: 53
Learning Objective: 5
179. Lenovo is __________.
a) a personal computer maker
b) a museum showing sustainable ideas for the future
c) a shelter for the homeless in China
d) a home-away-from-home for families of very sick children
e) the name of an industrial park in Malaysia
Ans: a
Feedback: Lenovo is a leading personal computer maker not just in China but also in many
parts of Asia and the world.
Page: 55
Learning Objective: 3
180. Lenovo aim(s) to __________.
a) continue to embrace its Chinese roots
b) build good relationships with others
c) price affordably
d) continue to break into new markets
e) all of the above
Ans: e
Feedback: Lenovo embraces its Chinese roots for manufacturing and research by locating its
facilities mainly in Asian countries. It also seeks to make use of guanxi (meaning
“connections” or “relationships”) as an advantage over foreign rivals. The Chinese
government has also provided support in terms of promoting “Buy Local” campaigns and
providing discounts from upstream companies in the supply chain, allowing Lenovo to price
competitively against its foreign competitors. The Asian giant has embarked on many
international ventures allowing its products to be integrated into new components and
markets.
Page: 57
Learning Objective: 2
181. Which of the following is part of the Lenovo strategy to change the way consumers
think about its gas stations?
a) Teaming up with highly respected business partners after acquiring IBM
b) Gain brand recognition
c) Innovation to meet consumers’ needs
d) Maintain strong and consistent marketing messages for its PCs
e) All of the above are part of the Lenovo strategy to shed its stereotyped image as a
value-conscious PC
Ans: e
Feedback: Lenovo has sought to gradually shed its stereotyped image as a value-conscious
PC firstly by gaining well established brand equity, which is maximized by teaming up with
highly respected business partners after its acquisition of IBM. Simultaneously, through
constant innovation and strong marketing, Lenovo tries to change its image in consumers’
minds.
Page: 57
Learning Objective: 5
Short Answer
182. Describe the composition of the three organizational levels whose strategy is linked to
marketing.
Ans: The three levels are
(1). corporate level where the top management directs overall strategy for the entire
organization
(2). strategic business unit (strategic business units refers to a subsidiary, division or, unit of
an organization that markets a set of related offerings to a clearly defined group of customers)
level where business unit managers set a more specific direction for their businesses to
exploit value-creating opportunities
(3). functional level where groups of specialists actually create value for the organization.
(The term "department" generally refers to these specialized functions such as marketing and
finance.)
Page: 33-34
Learning Objective: 1
183. There is a General Motors plant in Spring Hill, Tennessee, that is devoted solely to the
production of Saturn cars. At which organizational level is this plant operating? Explain your
answer.
Ans: The Saturn plant operates as a business unit of General Motors. It is an organization that
markets a set of related products (in this case various Saturn models) to a clearly defined
group of customers (people who want to own Saturn cars).
Page: 30
Learning Objective: 1
184. What is a cross-functional team and how is it used?
Ans: When developing marketing programs for new offerings or for improving existing ones,
an organization's senior management may form cross-functional teams. These consist of a
small number of people from different departments who are mutually accountable to
accomplish a task or a common set of performance goals. Sometimes these teams will have
representatives from outside the organization, such as suppliers or customers, to assist them.
Page: 30
Learning Objective: 1
185. Explain what a visionary organization is and the two key steps that are part of how
visionary organizations formulate strategies.
Ans: Management experts stress that to be successful, today's organizations must be
visionary—must both anticipate future events and respond quickly and effectively. This
requires a visionary organization to specify its foundation (why), set a direction (what) and,
formulate strategies (how). An organization's foundation is its philosophical reason for being
–why it exists. So its senior managers must identify its core values and describe its mission
and organizational culture—its purpose for being. Next, these managers can set the direction
for the organization by defining its business and specifying its long-term and short-term
goals.
Page: 30
Learning Objective: 2
186. List potential stakeholders for the college or university that you attend.
Ans: Students' answers will vary, but each answer should recognize that there are both
external and internal stakeholders for each organization. Their lists could include students,
deans, instructors, the community in which the institution is located, boards or governments
that regulate campus activities, guest speakers and, graduates.
Page: 32
Learning Objective: 2
187. What is a corporate mission?
Ans: by understanding its core values, an organization can take steps to define its mission, a
statement of the organization's function in society, often identifying its customers, markets,
products and, technologies. Today, often used interchangeably with vision, a mission
statement should be clear, concise, meaningful, inspirational and, long-term. A good mission
should be a clear, challenging and, compelling picture of an envisioned future.
Page; 32
Learning Objective: 2
188. Useful criteria for writing effective goals are given by the acronym SMART. What does
SMART stand for in this context?
Ans: Specific: Be a precise description of what is to be achieved
Measurable: Be a quantitative value to show attainment
Attainable: Be achievable, but challenging
Relevant: Be pertinent to the organization's mission
Time-based: Have a deadline for completion
Page: 34
Learning Objective: 2
189. Name and briefly describe the seven types of corporate goals.
Ans: The seven types of corporate goals are:
(1). Profit. Economic theory assumes a firm seeks to maximize long-run profit.
(2). Sales Revenue. A firm may elect to maintain or increase its sales level, even though
profitability may not be maximized.
(3). Market Share. A firm may choose to maintain or increase its market share--sometimes at
the expense of greater profits.
(4). Quality. A firm may target the highest quality.
(5). Customer Satisfaction. Customers are the reason the organization exists, so their
perceptions and actions are of vital importance.
(6). Employee welfare. An organization may recognize the critical importance of its
employees by having an explicit goal stating its commitment to good employment
opportunities and working conditions for them.
(7). Social responsibility. A firm may seek to balance the conflicting goals of consumers,
employees and, stockholders to promote overall welfare of all these groups, even at the
expense of profits.
Page: 34
Learning Objective: 2
190. The logistics industry has sales of $800 billion per year. If a third party logistics
provider had sales of $8 billion, what would its market share be? Be sure to define market
share and show your work in your answer.
Ans: Market share is the ration of sales revenue of the firm to the total sales revenue of all
firms in the industry, including the firm itself. In this case, the sales of the firm itself ($8
billion) divided by the sales revenue of all firms in the industry ($800 billion) means that the
third party logistics provider in question has a 1% market share.
Page: 34
Learning Objective: 2
191. Explain the difference between "competencies" and "competitive advantage" in an
organizational setting.
Ans: an organization's core competencies are its special capabilities, including skills,
technologies and, resources that distinguish it from other organizations and that provide value
to its customers. Exploiting these competencies can lead to success, particularly if other
organizations cannot copy them.
Competencies should be distinctive enough to provide a competitive advantage, a unique
strength relative to competitors, often based on quality, time, cost or, innovation.
Page: 35
Learning Objective: 3
192. One of the most recognized approaches to business portfolio analysis is the Boston
Consulting Group's growth-share matrix. By dividing each dimension into high and low
categories, the matrix contains four cells. Briefly describe the four quadrants of the matrix.
Ans: bCG has given specific names and descriptions to the four quadrants in its growth-share
matrix. They are as follows:
- Cash Cows—(lower left quadrant) have a dominant share of a slow growth market; they
typically generate large amounts of cash to invest in other SBUs.
- Stars—(upper left quadrant) have a high share of high-growth markets; they may not
generate enough cash to support their own needs to support future growth.
- Question Marks—(upper right quadrant) are SBUs with a low share of high growth markets;
they require large amounts of money just to maintain their market share.
- Dogs—(lower right quadrant) have a low share of low-growth markets; although they may
generate enough cash to sustain themselves, they hold little promise of becoming winners for
the firm.
Page: 38
Learning Objective: 3
193. The Boston Consulting Group's business portfolio analysis model can be used to guide a
firm as it tries to change its relative market share (the factor on the horizontal axis). What are
the strengths and weakness of this model?
Ans: The primary strength of business portfolio analysis lies in forcing a firm to place each of
its SBUs in the growth-share matrix, which in turn suggests which SBUs will be cash
producers and cash users in the future. Weaknesses of this analysis arise from the difficulty in
(1) getting the needed information and (2) incorporating competitive information into
business portfolio analysis.
Page: 40
Learning Objective: 3
194. Explain what the Hedgehog Concept is.
Ans: Jim Collins, author of Good to Great, believes that an excellent organization must
employ the "Hedgehog Concept". The Greek parable of the hedgehog and the fox says that
"the fox knows many things but the hedgehog knows one big thing". An organization using
the Hedgehog Concept develops a simple, excellent offering that captures the imagination of
its employees and its customers.
Page: 40
Learning Objective: 3
195. Explain what the Blue Ocean Strategy is.
Ans: W. Chan Kim and Renée Mauborgne, co-authors of Blue Ocean Strategy, believe that
an organization must swim out of the "red ocean of bloody competition" and into a "blue
ocean having less competition".
Red oceans represent an organization's existing industry whose boundaries are well defined
and accepted by its sellers and buyers. Here an organization competes for market share. Over
time, the number of competitors increases and they begin to look alike so that their offerings
and brands become commodities—barely distinguishable to consumers. So the ocean (market)
becomes blood red as competitors (sharks) eat each other up battling for market share.
Blue oceans are all industries (1) not yet in existence or (2) that are created by expanding
industry boundaries. An organization that follows a blue ocean strategy reduces or eliminates
some factors an industry competes on while raising and creating value to buyers on other
factors. This creates a leap in value for both the organization and its customers.
Page: 41
Learning Objective: 3
196. Define "marketing dashboard" and "marketing metric" and explain how these terms are
related.
Ans: a marketing dashboard is the visual display on a single computer screen of the essential
information related to achieving a marketing objective. Often it is an Internet-based display
with real-time information and, active hyperlinks to further detail. With a marketing
dashboard, a marketing manager glances at a graph or table and makes a decision whether or
not to take action or, often to do more analysis to understand the problem better.
Each performance variable is a marketing metric, a measure of the quantitative value or trend
of a marketing activity or result. These are displayed on the marketing dashboard.
Page: 41
Learning Objective: 3
197. Identify and describe the three phases of the strategic marketing process.
Ans: The three phases of the strategic marketing process are: planning, implementation and,
evaluation.
(1) Planning Phase includes
(a) situation (SWOT) analysis to identify industry trends, analyze competitors, assess own
company and, research customer
(b) market-product focus and goal setting, which involves setting market and product goals,
selecting target markets, finding points of difference and, positioning the product
(c) marketing program development, which involves developing the program's marketing mix
and, developing the budget by estimating revenues, expenses and, profits.
(2) Implementation Phase involves
(a) obtaining resources
(b) designing the marketing organization;
(c) developing schedules
(d) executing the marketing program.
(3) Evaluation Phase involves
(a) comparing the results of the marketing program plans to the results achieved to identify
deviations
(b) acting to correct negative deviations and, exploit positive ones.
Page: 44
Learning Objective: 4
198. Identify and describe the four factors in a SWOT analysis and give examples for Ben &
Jerry's Homemade ice cream that help it identify the critical strategy-related factors that could
have major effects on it.
Ans: The four critical factors in a SWOT analysis and examples for Ben & Jerry's are:
(1) internal strengths, such prestigious, well known brand name among U.S. consumers, large
share of the super premium ice cream market, can complement Unilever's existing ice cream
brands, widely recognized for its social mission, values and, actions
(2) internal weaknesses, such as danger that B & Js social responsibility actions may add
costs, reduce focus on core business, need for experienced managers to help growth, modest
sales and profits in recent years
(3) external opportunities, such as growing demand for quality ice cream in overseas markets,
increasing U.S. demand for frozen yogurt and other low-fat desserts, success of many U.S.
firms in extending successful brand in one product category to others
(4) external threats, such as consumer concern with fatty desserts; B & J customers are the
type who read new government-ordered nutritional labels, competes with giant Nestlé and its
Haagen-Dazs brand, international downturns increase the risks for B & J in European and
Asian markets
Page: 45
Learning Objective: 4
199. A campus service organization annually raises money through the sale of t-shirts. How
could it use market segmentation to increase sales of the shirts? Be sure to include a
definition of market segmentation in your answer.
Ans: Market segmentation involves aggregating prospective buyers into groups or, segments
that (1) have common needs and (2) will respond similarly to a marketing action. Students'
examples will vary. The service organization may decide to sell shirts to two segments,
current students and local residents. A marketing plan should be developed for both segments
since the marketing plan will not necessarily be identical for each. For example, while the
price and product may be the same, the place the shirts are sold to the students would be the
campus bookstore, while the local residents may buy the shirts in a local clothing store. The
promotion for the shirts aimed at students may be flyers posted in the dorms and ads in the
college newspaper. The promotion aimed at the locals may be an ad in the local community
newspaper and flyers posted in the grocery store.
Page: 46
Learning Objective: 4
200. What are the marketing mix elements that compose a cohesive marketing program?
Ans: Figure 2-7 illustrates the principal components under each of the four Ps. Product:
features, brand name, packaging, service, warranty. Price list price, discounts, allowances,
credit terms, payment period. Promotion: advertising, personal selling, sales promotion,
public relations, direct marketing. Place: outlets, channels, coverage, transportation and, stock
level. The instructor should probably not expect students to recall every item, but can set a
reasonable number of items correctly identified, according to his or her expectations.
Page: 47
Learning Objective: 5
201. A campus service organization annually raises money through the sale of t-shirts. What
are the major components of the marketing program it should use to increase sales? Give one
example of each.
Ans: a marketing program should include product, price, promotion and, place strategies.
Students' examples will vary. The product strategy would include packaging and design of
shirts. Promotion strategy would encompass how the group plans to communicate
information about the sale to other students. Price strategy would include list price and any
quantity discounts. Place strategy would include how the shirts will arrive at the point of sale
and selection of the point of sale.
Page: 47
Learning Objective: 5
202. What are the four components of the implementation phase of the strategic marketing
process?
Ans: The four components of the implementation phase of the strategic marketing process
are:
(1) obtaining resources
(2) designing the marketing organization
(3) developing schedules and,
(4) actually executing the marketing program designed in the planning phase.
Page: 48
Learning Objective: 5
203. What is the difference between marketing strategies and marketing tactics?
Ans: a marketing strategy is the means by which a marketing goal is to be achieved, usually
characterized by
(1) a specified target market and
(2) a marketing program to reach it; it implies both the end sought (target market) and the
means to achieve it (marketing program).
Marketing tactics, on the other hand, are detailed day-to-day operational decisions essential to
the overall success of marketing strategies, such as writing advertising copy or selecting the
amount for temporary price reductions. Marketing strategies and marketing tactics blend into
each other. Effective marketing program implementation requires concern for both.
Page: 49
Learning Objective: 5
204. What is the purpose of the evaluation phase of the strategic marketing process? How is it
accomplished?
Ans: The evaluation phase of the strategic marketing process seeks to keep the marketing
program moving in the direction set for it. Accomplishing this requires the marketing
manager to compare the results of the marketing program with goals in the written plans to
identify deviations and to act on these deviations—correcting negative deviations and
exploiting positive ones.
Page: 49
Learning Objective: 5
205. Explain what a planning gap is and what is used to close it.
Ans: a planning gap is the difference between the projection of the path to reach a new goal
and the projection of the path of the results of a plan already in place. To increase the sales
from the current projection to the new, higher projection, a marketing plan should be used.
Page: 49-50
Learning Objective: 5
Multiple Choice
206. Several years ago the Honda Motor Company unveiled the hybrid version of the Honda
Civic. While the hybrid vehicles are very fuel efficient, they are also very expensive to
purchase. Hybrid vehicles sales have increased over 570 percent with a compound annual
growth rate of 88.6%. Sales of the Civic eventually overtook those of the Toyota Prius,
making it the number one hybrid car in the U.S. For years Honda has experienced
tremendous success with their Accords—in fact, Honda cars are repeatedly the top selling
automobiles in the U.S. Where would the Honda Civic (hybrid version) and the Honda
Accord fall in the BCG product portfolio matrix?
a) The hybrid Civic would be a classified as a star and, the Accord would be classified a cash
cow
b) The hybrid Civic would be considered a cash cow and, the Accord would be classified as a
star
c) Due to the overwhelming success of Honda cars, both the Accords and, the hybrid Civics
would be classified as cash cows
d) The Civic would be a problem child and, the Accord would be a cash cow
e) The Civic would be considered a dog and, the Accord would be classified as a star
Ans: a
Feedback: The BCG matrix is based upon market growth rate and market share. The hybrid
market is a high growth market with little competition. Only Toyota is a competitor with the
Prius. The Honda Civic hybrid is, a new competitor in this high-growth market and, has
slightly over half of the market share of this market. The vehicle will require large injections
of cash from other products in the Honda line to maintain or increase market share. The
Honda Accord auto is well established in slower-growth markets and control a significant
percentage of market share. Thus, the Accord will be a cash cow for Honda and, the revenues
generated from the sale of these cars will be used to finance the cash-intensive marketing of
the new hybrid Civic, a star in the BCG matrix.
Page: 38
Learning Objective: 3
207. According to Figure 2-3, the circle in the highest growth market is
a) Circle 1
b) Circle 2
c) Circle 3
d) Circle 4
e) All of the circles are in low growth markets
Ans: b
Feedback: The vertical axis represents market growth rate. Since circle 2 is the highest on this
axis, it is in the highest growth market.
Page: 38
Learning Objective: 3
208. The acronym "SWOT" used in the term "SWOT analysis" stands for
a) Strengths, weaknesses, opportunities and, timing
b) Strategies, work load, opportunities and, timing
c) Strengths, weaknesses, opportunities and, threats
d) Simple, workable, optimal and, timely
e) Situational, worldwide or,ganizational and technological
Ans: c
Page: 44
Learning Objective: 4
209. The goal of a SWOT analysis is to
a) Identify those strategic factors that can have a major effect on the firm
b) Keep top management placated
c) Discover areas for diversified investment outside the firm's marketing areas
d) Develop new products for new market segments
e) Allocate financial resources across the industry
Ans: a
Feedback: The ultimate goal is to identify the strategic factors affecting the firm and then
build on vital strengths, correct glaring weaknesses, exploit significant opportunities and,
avoid disaster-laden threats.
Page: 45
Learning Objective: 4
210. A marketing __________ is defined as the means by which a marketing goal is to be
achieved. It is characterized by a specified target market and the marketing program to reach
it.
a) Plan
b) Tactic
c) Strategy
d) Concept
e) Action program
Ans: c
Page: 49
Learning Objective: 5